Amazon Prime’s 20% subscription spike follows an 18% price hike for its monthly membership earlier this year. Here’s what you’re getting for that.
Alexa, why is Amazon getting so expensive?
The world’s biggest online retailer announced that it’s hiking the cost of its annual Prime membership for U.S. users from $99 to $119 on Thursday, and the $20 increase will take effect on May 11 for new members, and June 16 for current ones.
This is the first time that Prime members have had to cough up extra cash to enjoy perks such as free two-day delivery millions of items, since March 2014 — although Amazon recently bumped up the price for monthly Prime subscriptions by about 24% from $10.99 to $12.99 per month, adding up to about $156 per year.
Amazon has more than doubled its profits this spring after reaching more than 100 million paid Prime members and reporting subscription revenue up 60% to $3.1 billion. Company executives said that the 20% hike is to cover the higher costs to maintain the program, such as shipping fees, as its membership continues to grow. CFO Brian Olsavsky noted in an earnings call on Thursday that two-day delivery has expanded to more than 100 million items, compared to the 20 million items it covered in 2014. And you can now get same-day delivery for orders over $35 at more than 5,000 cities.
“There are many features we’ve added to Prime,” he said, as reported by Bloomberg. “It’s much different than it was in 2014 and this is a reflection of that.”
For instance, Prime members can enjoy two-hour free delivery from their local Whole Foods Market, as well as occasional discounts that other shoppers don’t get, after Amazon’s $13.7 billion acquisition of the grocery giant last summer. Prime members with an Amazon Prime Rewards Visa Card through Chase can now also earn 5% back on Whole Foods purchases when grocery shopping with that card.
They also get unlimited streaming of thousands of movies and TV shows with Prime Video; listen to millions of songs, ad-free, through Prime Music; borrow more than 800,000 books from the Kindle Owners’ Lending Library for $99 a year or $10.99 a month; and even order groceries online and pick them up at the store in as little as 15 minutes.
“We do feel it’s still the best deal in retail,” Olsavsky added.
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